Bolivia will improve effectiveness of public spending with IDB support

Loan for $106 million to consolidate mechanisms for effective, efficient, and transparent public expenditure based on results

Bolivia will receive a loan for $106 million from the Inter-American Development Bank (IDB)to support policy actions that will improve and strengthen mechanisms for effective, efficient, and transparent public expenditure. This is the latest in a series of three programmatic policy-based loans for Bolivia in the fiscal sector.

The present operation is aimed at improving the quality of the budgetary process, administration of public expenditure, the execution and efficiency of public expenditure, and achieving greater transparency and accountability.

Measures to be carried out by the program include drafting multiyear budgets in State-owned enterprises and central government agencies; introducing results-based management in central government agencies by means of performance agreements; and the expansion of coverage of fiscal information systems at the subnational level.

The program will also support the policy to control erroneous payments in the pension system through cross-referencing of databases; expand the number of central and subnational government agencies that have public accountability processes; support implementation of the transparency policy in public procurement; and enact legislation to regulate social oversight in accordance with the nation’s Constitution.

The two first two operations were approved by the IDB in 2005 and 2010 for $15 and $30 million, respectively. Their implementation has resulted in significant progress towards more effective and efficient public expenditure management.

This progress has included the development of a medium-term macro-fiscal framework; the introduction of results-based public administration; the development and implementation of fiscal information management systems in the central government; and the launch of the public accountability process.

The IDB financing consists of $84.8 million from the ordinary capital for a term of 30 years, a six-year grace period, and an SCF-fixed interest rate; and a $21.2 million loan from the Fund for Special Operations, the Bank´s concessional financing window, for a 40-year term and grace period and an interest rate of 0.25 percent.